During the month of October 2022 Amendments to the tax legislation of Georgia

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1. Changes in the orders of the Minister of Finance of Georgia.

       1.1. Change in electronic form of communication. 

2. Changes in the orders of the head of the revenue service.

     2.1. Methodological guidance on immaterial losses.

     3. Changes in government regulations. 

     3.1. Creation of free industrial zone of Sagarejo. 

1. Changes in the orders of the Minister of Finance of Georgia

1.1. Change in the part of communication in electronic form

On October 2022, 19, an amendment to the Order of the Minister of Finance N996 was published and entered into force. The amendment touched on the issue of communication in electronic form, in particular, part 11 of Article 2 of the order was changed and it was written that a document/letter prepared and submitted by a person from rs.ge in electronic form does not require a signature, including a qualified electronic signature or / and placing a qualified electronic stamp. In more detail, the new edition of the mentioned article was formulated as follows:

2. Through the website of the service - a document/letter prepared and submitted by a person in electronic form does not require a signature/qualified electronic signature/qualifying electronic stamp. In addition, the document/letter created and sent by the tax/customs authority in electronic form does not require the signature of the authorized person. The document/letter provided for in this paragraph has the same legal force as a document/letter submitted/sent in written form, certified with a personal signature and seal.

2. Changes in the orders of the head of the revenue service

2.1. Methodological instruction on immaterial losses

On October 2022, 13, for the purpose of determining the tax liability, a new methodical reference was approved, on the non-consideration of non-essential losses of non-food goods detected in trading facilities as a loss, which is applicable to the losses of non-food goods detected from January 2022, 1.

According to the said methodological guidance, an immaterial loss, which is not considered a loss for tax purposes and is not subject to taxation, is in the taxpayer's trading facilities.

The sum of the deficit of non-food goods identified during the current calendar year, the market value of which (without VAT) does not exceed 0.5% of the total sales value (without VAT) of the non-food goods sold from the taxpayer's trading facilities during the previous calendar year, including those taxed as a deficit. S.

For the purposes of the presented methodological reference:

• Trade facility - a store (market, supermarket or hypermarket), where the retail sale of non-food goods is carried out on the principle of "open warehouse" (that is, where the entrance and exit of customers are identified, the goods are placed in a place accessible to the customer, the customer independently chooses the desired goods among them, purchase and sale of goods recorded with barcodes).
• Non-food goods - any product (eg: hygiene and washing products, household utensils, chemicals, etc.) - except for food; excise goods; of wine beverages subject to labeling; pharmaceutical product; food additives; household/construction and other purpose goods; clothes/shoes and/or other clothes and related accessories; cosmetics and/or perfumery.

If there is no previous calendar year or there is an incomplete previous calendar year, from the date of registration as a taxpayer to the end of the first full calendar year, the insignificant loss is determined for each calendar month of this period separately, and the insignificant loss for the calendar month in which the loss is detected is the loss of non-food goods, the market value of which does not exceed , from the date of registration as a taxpayer including the calendar month of detection of this deficit, 0.5% of the total sales value of non-food goods sold from the taxpayer's trade facilities. And every subsequent time, the principle will remain the same, although the calculated amount should be reduced by the non-essential losses used in the previous calendar months.

Insubstantial loss is subject to recalculation, if the sum of sales values ​​(excluding VAT) of non-food goods realized during the current calendar year, including those taxed as a loss, differs significantly

from similar data of the previous full calendar year. In particular, if the corresponding amount (turnover) has increased by 10% or more compared to the previous year, the taxed losses during the current calendar year are subject to reduction by specifying the declarations of the same calendar months in which they were reflected in taxation. And if it decreased by 10% or more, the untaxed losses during the current calendar year are subject to reflection in the corresponding declarations of the reporting period of December of the same year. A newly registered taxpayer also has the right to the said recalculation.

This methodical reference is applied to the loss of non-food goods, the person carrying out the theft and/or illegal consumption of which has not been identified and is not used if the appropriate damage/compensation has been imposed on someone within the scope of the non-essential loss or if there is other evidence that excludes the loss. In addition, if the taxpayer wants to wholesale the goods from the same area (building) where the "open warehouse" is located, the said sale must be carried out without entering the relevant goods into the "open warehouse".

If the identified deficit includes both VAT-taxable and VAT-exempt non-food goods, in each deficit, the non-food taxable VAT-taxable deficit shall be considered as non-substantial loss first. In addition, in the case of annual recalculation, the mentioned sequence will be maintained for each deficit

3. Changes in government regulations

3.1Creation of free industrial zone of Sagarejo

On October 2022, 11, the new Resolution No. 479 of the Government of Georgia on the creation of the Sagarejo Free Industrial Zone was published and put into effect.

According to the resolution, 1,117,450 m in Bogdanovka village of Sagarejo municipality² A free industrial zone of Sagarejo should be created on the plot of land for a period of 50 years, whose organizer/administrator authority will be exercised by "Asi Group Georgia" LLC.

The period of operation of the customs checkpoint of Sagarejo Tiz was determined not later than September 2023, 1.

We remind you that the status of a free industrial zone enterprise implies exemption from a number of taxes, in particular, the enterprise is exempted from such taxes as:

1. Tax on distributed profits;
2. Dividend income/profit paid;
3. interest income/profit paid;
4. salary income (paid by the hired);
5. property tax;
6. VAT withholding tax